RedFish LongTerm Capital SpA (from GBC AG): Buy

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Original research: RedFish LongTerm Capital SpA – by GBC AG

28.08.2024 / 10:00 CET/CEST

Dissemination of a survey, broadcast by EQS News – a service of EQS

Group AG.

The publisher is solely responsible for the content of this research.

the results of this research do not constitute investment advice or a

invitation to conduct certain stock exchange transactions.

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Classification of GBC AG to RedFish LongTerm Capital SpA

Company Name: RedFish LongTerm Capital SpA

ISIN code: IT0005549354

Reason for the research: Management Interview

Recommendation: Buy

Target price: 2.92 EUR

Target price at sight of: 31.12.2025

Last review change:

Analyst: Matthias Greiffenberger, Cosmin Filker

‘RFLTC aims to achieve a market capitalization of EUR 150 million by

additional fundraising and focus on new acquisitions’

RedFish LongTerm Capital SpA, based in Milan, is an industrial holding company

company specialized in the acquisition of Italian family businesses in the SME sector. RFLTC

focuses on mature companies with the potential for significant growth and

expansion into both the domestic and international markets.

GBC AG: Can you provide a comprehensive overview of RedFish LongTerm Capital?

SpA, which describes the main activities, the mission and the factors that make SpA come into being.

the company unique?

RedFish LongTerm Capital SpA (RFLTC) is a listed investment holding company

company with a focus on industrial family businesses in the SME sector. Founded in 2020 by

Paolo Pescetto, Andrea Rossotti and the Bazoli Gitti family, RFLTC, are

committed to long-term investments, involving both qualified minority and

majority interests, including through Club Deals.

Our strategy is focused on acquiring interests in companies where the RedFish team

of experts can make a meaningful impact through their competencies. We

Prioritize opportunities where market dynamics support a build-up strategy

through merger and acquisition activities.

RFLTC is designed to capture and maximize value through lean cost

structure and a reward system linked to the appreciation of the

listed shares of the company (via stock option plans) and an incentive structure

based on dividend payments to shareholders.

GBC AG: What are the key criteria that RedFish LongTerm Capital uses to

identify and select the target companies for acquisition?

RedFish LongTerm Capital acts as a long-term industrial partner for its

subsidiaries, which aim to grow their portfolio companies without predetermined

exit periods. Capital is raised through targeted increases, without being dependent

on pre-committed investor funds. This approach enables RedFish to participate in

deals with entrepreneurs who are not looking for a typical Private Equity

investor, but instead are looking for long-term partners. These partners are

committed to guiding the company on a ‘safe’ journey to organic

and an inorganic growth plan, including cross-border mergers and acquisitions.

Our long-term investment horizon enables RFLTC to make new investments at

attractive, low entry multiples (currently averaging 4.96x EV/EBITDA).

Entrepreneurs are reassured by the ability to generate value through a

long-term cooperation with RFLTC and its industrial expertise.

We primarily focus on family businesses in the SME sector that are active in niche markets with

important business know-how where the RFLTC team can apply its expertise

experience in driving growth through M&A strategies.

GBC AG: Can you provide details on your most recent acquisitions and

Can you explain how these acquisitions fit into your overall investment strategy?

RFLTC’s latest acquisition is a minority stake (15%) in INDUSTRIE POLIECO

MPB SpA

Polieco Group is a family-owned company, founded in 1977 and based in North America.

Italy and is the leading producer in Italy of double-walled corrugated cardboard sheets

polyethylene piping systems. In addition, the company produces resins

for pipe coatings and the packaging sector. In 2023, Polieco Group achieved

EUR 200 million in turnover, EUR 45 million in EBITDA and a net profit of EUR 200 million.

financial position of zero.

The company’s business model is divided into two units:

* Piping systems (58% of turnover): Focused on the design and

production of pipes for electricity and telecommunications

installations in residential buildings, together with piping solutions for

sewerage systems (‘Ecopal’ systems) and manhole covers.

* Resins (42% of turnover): Specialized in the production of resins used

for coating oil and gas pipelines and adhesives for various

industries including food packaging, cosmetics and pharmaceuticals.

This acquisition fits perfectly with our strategy because: (i) the

favourable entry multiple that we have negotiated, (ii) the potential to

cross-border M&A strategy in collaboration with existing management, and

(iii) the company’s low debt burden and high cash flow generation within its niche

market.

GBC AG: Can you elaborate on the strategic importance and performance of

some of your key portfolio companies?

One of RFLTC’s key portfolio companies is Movinter SpA, through

which RFLTC is leading an aggregation project in the rail and marine sector

sectors, using its industrial expertise. Movinter, a 100% owned

company, was acquired in April 2023 with a turnover of 22 million euros,

specialized in the production of light carpentry for train and metro carriages.

In November 2023, Movinter acquired Six Italia, a €15 million company

specialized in “special materials” for the railway and shipping industries.

This was followed by a second acquisition in June 2024, when Movinter

acquired Saiep Srl, another 15 million euro company specialized in electrical

solutions (wiring) for rail trains.

This build-up strategy is aimed at creating a group that can introduce production

and product synergies, enabling Movinter to transition from offering a

single product to delivering a complex assembly. This ‘one-stop shop’

approach positions Movinter as a single point of contact for major customers

such as Hitachi and Alstom. With the acquisitions of Six Italia SpA and

Saiep Srl, the group now forecasts annual consolidated turnover of more than

60 million euros.

GBC AG: What specific strategies does RedFish LongTerm Capital use to

create value within its portfolio companies?

Our strategy focuses on (i) cross-border mergers and acquisitions through an add-on approach,

(ii) stimulating international expansion and (iii) providing strategic

consultation with our industry experts. We also prioritize (iv) strengthening

governance and management structures, while (v) increasing ESG awareness

within our portfolio companies.

GBC AG: What is your typical holding period for investments and how

approaching exits?

RFLTC has developed a unique industrial holding model that sets it apart

of traditional private equity funds (such as SICAF, ELTIF, SGR or

financial holding companies). While RFLTC is engaged in similar activities as

raising capital and acquiring companies to support their growth, the focus

is specifically aimed at acquiring family businesses in the SME sector or companies that are in a transition phase.

generational transitions, especially those poised for further growth and

development.

What sets RFLTC apart is its practical approach to operational

capabilities of its portfolio companies. This includes integrating key roles

such as a CFO with expertise in finance and banking, who has a robust

management control system, appointing a manager who reports directly to

ownership, bringing in an international sales expert and setting up a

ESG Support Committee currently being standardised within the Group.

These features are often lacking in companies of similar size, and RFLTCs

the ability to provide these services adds significant value to its

subsidiaries, an approach that is highly valued by entrepreneurs.

In addition, RFLTC distinguishes itself from financial institutions by:

its long-term investment horizon. Unlike typical financial holding companies, RFLTC

does not rely on drag-along clauses or pre-determined exit strategies.

Companies that RFLTC acquires are often second or third generation companies

where the founders’ legacy remains relevant for many years to come,

with RFLTC’s commitment to long-term growth and stability.

GBC AG: Which sectors do you consider most promising for future investments?

and why?

1. MADE IN ITALY: Italian family businesses in the fashion and interior design sector

Design industries have long been recognized as leaders in their niche

markets. These companies distinguish themselves through their creativity

and top quality production, which stands for excellence in ‘Made in Italy’

craftsmanship.

2. ICT / INDUSTRIAL AUTOMATION: Following our co-investment in Matic Mind

In addition to Fondo Italiano d’Investimento, RFLTC remains very interested

in the ICT sector and industrial automation. We are particularly focused

on digital operators and engineering companies that have strong

competitive advantages and demonstrate significant growth potential.

3. FOOD: The Italian food industry remains highly fragmented and presents

opportunities for consolidation through the acquisition of SMEs rooted in

in the rich Italian food tradition. This sector remains resilient

demand both nationally and internationally, making it a strategic area

for aggregation projects.

With a view to the future, we are deepening our involvement with Movinter, where RFLTC

building a group of companies active in the railway, aerospace and marine sectors

sectors. Our goal is to create production and product synergies in these sectors.

subsidiaries, resulting in significant cost savings and improved operational

efficiency.

GBC AG: Where do you see RedFish LongTerm Capital in the next 5-10 years,

And what are the most important milestones you want to achieve during this period?

RFLTC aims to achieve a market capitalization of EUR 150 million by

additional fundraising and focus on new acquisitions. Our strategy

emphasises sector diversification and a robust add-on policy for our

subsidiaries.

GBC AG: Thank you for the interview.

You can download the study here: http://www.more-ir.de/d/30635.pdf

Contact us for questions:

GBC AG

Halderstraat 27

86150 Augsburg

0821 / 241133 0

[email protected]

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Offensive conflicts of interest according to § 85 WpHG and Art. 20 MARCH

Beim open analyzes Unternehmen ist next possible

Interest conflict gegeben: (5a,11); A catalog more possible

Conflict of interest can be found under:

https://www.gbc-ag.de/de/Offenlegung

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Completion Date (Time): 27.08.2024 9:00

First distribution date (time): 28.08.2024 10:00

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